The scheme provides differentiated fiscal incentives on target segment products, depending on the specific challenges being faced by the industry to: 

• develop a robust component manufacturing ecosystem by attracting investments (global/domestic) across the value chain, leading to an increase in Domestic Value Addition (DVA)
•  increase the share of India’s exports in global electronic trade by integrating its domestic electronic industry with the Global Value Chains (GVCs).

Why Does India Need to Boost Domestic Manufacturing of Electronics  Components?

• National Security: Dependence on foreign-made electronic components, especially in defense and critical infrastructure, poses risks such as data breaches and supply chain disruptions.
  • China, Hong Kong account for 56% of India 's total imports of electronics, telecom, electrical products (GTRI)
• Rising Imports, Despite Domestic Production of End Products: Due to past initiatives by MeitY, India's electronics production grew from ₹1.90 lakh crore in FY15 to ₹9.52 lakh crore in FY24. 
  • However, imports of components also increased, as local capacity for component manufacturing remained underdeveloped.
• Strategic Opportunity Due To China+1 Shift: With global firms looking beyond China, India has a strong opportunity to attract investments in component and sub-assembly manufacturing. 
• Growing Importance of Electronics: Electronics is one of the fastest-growing global industries, driven by digitization. 

The latest scheme is expected to addressing structural challenges in the sector including high capital costs, long gestation periods, low profit margins, and lack of scale which were also raised by NITI Aayog.